Critique 35
BRANDING OVER THE CRACKS
JAMES HEARTFIELD
INTRODUCTION
‘One cannot step twice into the same river, for the water into which you first
stepped has flowed on’. Heraclitus, fragment 21
Market economies proclaim the advantage of flexibility over command
economies, but in exchange for that advantage, they must surrender their
claim upon the security of certain outcomes. Marketing gurus like Charles
Handy and Tom Peters upbraid their audiences with homilies drawn from
the philosopher of flux, Heraclitus: ‘Nothing certain, but change’ and
‘expect the unexpected’.
The social division of labour, though, has definite proportions at any one
moment. In London, 145 000 people working in computer and business
services stand waiting to serve the 460 000 strong financial service sector
centred on the City of London.1 But while investment and production goes
ahead on the assumption that the goods and services will be paid for, that
outcome is not in any way guaranteed – a fact underlined by the recent
disturbances in the financial markets. The point of sale is episodic. The
subdivision of tasks amongst different sections assumes a successful
outcome that only comes at the end of the process, if at all.
Like Heraclitus’ river, the torrent of fruit-flavoured, sugared water flows on.
Each purchase is discrete, and never literally repeated. But the brand Coca
Cola defies the episodic character of the sale, to endure beyond each
purchase, connecting them as if in one continuous chain. The Brand is the
attempt to fix the flux of the market society with the appearance of
permanence. Once branded, it seems that you can step into the same river
twice. (The recent collapse in Coca-Cola’s sales in Belgium, the
consequence of a health panic illustrates the real contingency behind the
1
‘The financial cluster generates large scale demand for telecommunication services,
consultancy, legal services, software, data processing and information’, Business Clusters
In The UK - A First Assessment, Appendix Three, London, p 24, p26
31
Branding Over the Cracks
durability of the Coke Brand.) Brands are for ‘turning fickle customers into
your company’s love slaves’, as Chuck Pettis (1995) puts it – except that
slavery has been abolished and love is fickle.2 Seattle Design Firm, the
Leonhardt Group, meanwhile hope that ‘brands are the emotional shortcut
between a company and its customers’.3 Making the wish the father to the
thought, Virgin’s Richard Branson says branding creates a ‘mutually
acknowledged relationship between supplier and buyer that transcends
isolated transactions’.4 But it is not possible to transcend the isolated
transactions that make up the market economy, without transcending the
market economy itself: the brand merely supplies the illusion of overcoming
the episodic character of market exchange.
This article looks at the contemporary vogue for branding in business theory
as symptomatic, less of success than of failure, of the attempts by businesses
to avoid market failure. It sees the quest for brand added-value as an attempt
to avoid diminishing returns, and looks at the ways in which branding raises
the threshold to market entry at the cost of rivals. It also investigates the
connection between re-branding, and attempts to overcome the barriers to
accumulation at the international level by disciplining labour. The
preoccupation with the value of brands – as opposed to the development of
new production – is a telling insight into contemporary capitalist selfperception.
BRAND FETISHISM
Thomas Gad, who ‘connected people’ for Nokia, deploys the metaphor of
genetic inheritance to ward off the fear of contingency: ‘The brand code
equals business DNA’.5 The appeal to an organic metaphor is telling. The
purchasers of Gad’s book 4D Branding are worried about how to replicate
the initial sales. Genetic replication stands for the spontaneous replication of
market success. Natural inheritance is a common metaphor for property
relations, one that invests them with the comforting fixity that they lack in
fact. Many years ago, the conservative Edmund Burke asserted hopefully
‘The laws of commerce are the laws of Nature, and therefore the laws of
2
Chuck Pettis, Technobrands: How to Create and Use Brand Identity to Market, Advertise
and Sell Technology Products, American Management Association, 1995, p18
http://www.tlg.com/branding/tbran.htm
4
Foreword to 4D Branding: Cracking the corporate code of the network economy, by
Thomas Gad, London: Pearson, 2001
5
Thomas Gad, 4D Branding, p16
3
32
Critique 35
God.’ 6 DNA is a more secular image, but it still holds out the promise of
the natural reproduction of market relations, and the replication of the
original sale.
Branding transforms the episodic processes of sale and purchase into a
singular object. Branding turns a social relation into a thing that can be
taken hold of, and even bought and sold on the market itself.7 The
ubiquitous Brands seem to us to be the epitomé of market relations. But the
appeal of the brand for the individual businessman is that it promises to
suspend the uncertainty inherent in the exchange process. Branding is an
attempt to overcome the spontaneous and unplanned character of market
exchange – albeit one that remains firmly within the confines of private
property.
The advertisers--or now brand consultants--are parasitic upon the anxiety of
businesses, promising to sell them the one thing that they cannot produce
…sales. Similarly, broadcasters and publishers ‘sell’ audiences,8 and polling
organizations sell ratings to advertisers.9
Branding is, in its essence, a defensive denial of the contingency of market
relations, on the part of companies whose precarious existence is a torment
to them, which must be warded off by the Juju of the brand.10 Peter York at
SRU Ltd hopes that ‘a brand should ensure a long-term and forgiving
relationship with its audiences’.11 On the other hand, David Bernstein warns
6
, (Thoughts and Details on Scarcity, London, 1800, p32)
‘When Phillip Morris acquired Kraft in 1988 for $12.9 billion, $1.6 billion was for
goodwill, the majority of which was based on the estimated brand values.’ Pettis, p206
8
The pioneer in this respect was 1920s CBS Chairman William Paley, who first syndicated
radio broadcasts, Sut Jhally, The Codes of Advertising, New York: Routledge, 1991 p71
9
‘Ratings per se must no longer be treated as reports of human behaviour, but rather as
products – as commodities shaped by business exigencies and business strategies’ Eileen
Meehan, ‘Ratings and the Institutional Approach’, Critical Studies in Mass
Communications, 1984, p221
10
‘Branding is ultimately about securing the future of the company’, Fiona Gilmore, Brand
Warriors, London: Harper CollinsBusiness, 1999, p 1
11
In Iain Ellwood, The Essential Brand Book, London: Kogan Page, 2000, p11, my
emphasis
7
33
Branding Over the Cracks
that ‘a logo is not a magic totem or a philosopher’s stone’, but such caveats
belong to a bygone age.12
‘The word “branding” is like a magical incantation’, says Thomas Gad.13
Belief in the magical properties of the brand is today commonplace. In the
first place, brands are mysterious. ‘What are brands made of?’ asks Arthur
Einstein, the New York-based advertising consultant. ‘They’re existential’.
Pettis points out that Einstein does not mean that brands are a response to
the existential angst of salesmen. He means that “while a product can be
touched and felt the brand itself is not a tangible thing. It is an
abstraction”.14 Chuck Pettis of the American Management Association is
similarly vague when posing the question ‘What is a brand?’. The answer is:
“The sensory, emotive and cultural proprietary image surrounding a
company or product… a significant source of competitive advantage … an
enhancement of perceived value and satisfaction” and “arguably the
company’s most important asset”.15 That should cover all bases, and nobody
could accuse brand consultants of pedantic or mundane thinking – on the
contrary, the imagination takes flight in discussions of branding.
Russell L Hamlin, CEO of the Sunkist Growers is also impressed by the
intangible: “an orange … is an orange … is an orange. Unless of course that
orange happens to be a Sunkist, a name eighty per cent of consumers knows
and trust.”16 The relation of trust between the producers and consumers here
has been re-directed on to the object itself. ‘Trust’ is an intention accorded
to other people, ordinarily, but here it is the Sunkist that deserves trust.
‘Men’, observed the philosopher Ludwig Feuerbach, “transpose their own
being into things”.17
French explorer Charles de Brosses first characterized the objects
worshipped by native peoples as ‘fetishes’.18 These man-made objects were
12
David Bernstein, Company Image and Reality: A Critique of Corporate Communications,
Holt, Reinhart and Winston, 1984, p 157
13
Gad, p9
14
quoted in Chuck Pettis Technobrands, p9
15
Pettis, Technobrands, p7
16
quoted in David A Aaker, Building Strong Brands, Free Press, 1996, ellipses in the
original
17
Ludwig Feuerbach, ‘Principles of the Philosophy of the Future’, in Wolfgang Schirmacher
(ed), German Socialist Philosophy, Continuum, New York, 1997, p67
18
Charles De Brosses, Du culte des dieux fétiches, ou Parallèle de l'
ancienne religion de
l'
Egypte avec la religion actuelle de Nigritie, 1760.
34
Critique 35
worshipped as if they were rather the creators of men. So, too are Brands
made into fetishes that, though made by us, come to rule over us. According
to United Biscuits’ Sir Hector Laing: “Buildings age and become
dilapidated. Machines wear out. People die. But what live on are brands.”19
Brands promise everlasting life to Sir Hector, but to others the brand
exemplifies everything that is wrong with our society.
Selling indulgences For the Pope’s visit to Denver in August 1993, the church
authorized the first merchandising campaign for ‘Pope products,’ including
everything from the standard T-shirts to the Pope-Scope’.20
Brand and anti-brand
In 1989 the Vancouver-based Media Foundation started the magazine
Adbusters, whose editor Kalle Lasn perfected the art of subverting the
corporate message, or ‘culture-jamming’. Culture-jamming caught the
moment: the ubiquity of the big brands, the Nike ‘swooshtika’ McDonald’s
Golden Arches and Microsoft presented a seamless continuum of
consumerism that was crying out to be ripped apart. After the antiglobalisation protests attained critical mass in Seattle 1999, brands were
becoming targets of hostility as well as desire.21 Anti-brand activists turn
Nike into Dike, and McDonalds into McMurder. Canadian radical Naomi
Klein’s spectacular assault on branding, No Logo, 22 was paid the backhanded compliment of being listed as the best-selling business book.
No Logo’s international success indicated all the strengths of the newly
emerging culture-jamming activism, but also perhaps some of its
weaknesses as well. Unwittingly, the anti-brand activist is paying homage to
the same God, albeit negatively.23 Both the brand enthusiast and the antibrand activist share the same belief in the superhuman power of brands. As
Mark Ritson, professor of Marketing at the London Business School argues
Countercultures “speak the words of opposition in a language in which we
19
quoted in Chuck Pettis Technobrands, p6
Pettis, Technobrands, p36
21
see James Heartfield, ‘Capitalism and anti-capitalism’, Interventions Vol.5(2), Taylor and
Francis, 2003, pp271-289
22
London, Flamingo, 2000
23
Surrealist film-maker Luis Bunuel once demanded of a young acolyte why he had not
followed his example and defiled the font of a church they visited. ‘I don’t believe in God’
the younger man replied.
20
35
Branding Over the Cracks
are all fluent: the language of brands.”24 In No Logo, the quality of the
journalism and the verve of the argument are not in doubt, but as an analyst
of the power of brands Klein is in danger of reproducing the underlying
prejudices of brand theory.
According to Klein: ‘“Advertising is about hawking a product. Branding, in
its truest and most advanced incarnations, is about corporate
transcendence.”25 If Klein were describing the capitalists’ tendency to
attempt to transcend the business of social production, it would be
convincing, but she goes further in seeing a literal transcendence of
production:
‘even the classic Marxist division between workers and owners doesn’t
quite work in the [Special Economic] zone, since the brand-name
multinationals have divested the ‘means of production,’ to use Marx’s
phrase, unwilling to encumber themselves with the responsibilities of
actually owning and managing the factories, and employing a labour
force.’26
Further, Klein emphasises ‘this is not a job-flight story. It is a flight-fromjobs story.’27
But it is difficult to square that claim with the long climb in the numbers in
work. Between 1950 and 1995 the world workforce increased from 1183m
to 2742m.28 Influenced by the New International Division of Labour
theory29 and the anti-NAFTA campaign, Klein emphasises the migration of
jobs to the Far East.30 But while it is true that there is job-relocation, the
workforces of the developed world have continued to expand quite
remarkably. Between 1986 and 2001 the 15 countries that would become the
EU expanded their workforces by 20 per cent, from 134,185,000 to
161,507,000; over the same period the civilian workforce in the US
expanded 13 per cent, from 180,587,000 to 209,699,000. Nor is it the case,
24
‘Conversion Tables’, Blueprint September 2000
No Logo, p21
26
p226
27
p229
28
ILO Monthly Bulletin, 1996
29
See Froebel, Folker, Heinrichs, Jurgen and Kreye, Otto The New International Division of
Labour, Cambridge: University Press, 1981
30
Chapter Nine, ‘The Discarded Factory’
25
36
Critique 35
as Klein argues, that the western world has dispensed with industrial
production, employing only clerks ‘to sell the brand name goods at the point
of purchase’.31 Despite the considerable growth of the East Asian industrial
workforce, most new value in manufacturing is still created in the West.
G loba l s hare in m a nufa cturing value a dded
80
Per centage of w orld total
70
60
50
So uth an d E ast Asia
North A me rica
W este rn E urop e
40
30
20
10
98
97
96
95
94
93
92
91
90
89
88
87
86
85
84
83
82
81
80
0
Year
Furthermore it is a mistake to take the statistical growth of service sector
employment in the West as evidence of a ‘post-material’ economy. Much of
the change is nominal, as activities undertaken in-house by industrial firms,
such as cleaning or servicing machines, are reclassified from productive jobs
to service jobs if they are out-sourced.32 It would be a mistake to reduce
productive labour to a physiological category directly related to material
transformation.33
31
No Logo, 232
see Gavin Poynter, Restructuring in the Service Industries: Management reform and
workplace relations in the UK service sector, London: Mansell, 2000 p14
33
‘The materialisation, etc. of labour is however not to be taken in such a Scottish sense as
Adam Smith conceives it. When we speak of the commodity as a materialisation of labour –
in the sense of exchange value – this itself is only and imaginary, that is to say, a purely
social mode of existence of the commodity, which has nothing to do with its corporeal
reality.’ Karl Marx, Theories of Surplus Value, Vol 1., London: Lawrence and Wishart, p171
32
37
Branding Over the Cracks
The prejudice that the realm of production has been transcended, or
relocated elsewhere serves to justify the restriction of the politics of protest
and contestation to the realm of exchange. In this way the culture-jammers
only hold up a mirror to brand theory, rejecting its conclusions while sharing
its underlying belief in the priority of consumption over production. The
tendency is for culture-jamming to reduce to an arch commentary on
consumer goods, part of the language of taste by which the educated mark
themselves off as more discerning consumers than the hoi polloi. It is hard
to tell whether the Biotic Baking Brigade’s Subcomandante Tofutti and his
Global Pastry Uprising is parodying capitalism or parodying opposition to
capitalism.34
Not only does culture-jamming tend to end up paying homage to brands as
much as it critiques them, it also grants undue authority to the power of the
brand. Where Klein’s account portrays the brand as the culmination of the
power of the market, the contemporary explosion of branding is not
evidence of health, but decline. Hypnotised by the power of brands, the antibrand activists fail to recognise that these are indications of capitalism’s
running up against its inner limits. In particular, branding indicates the
attempt – ultimately futile – on the part of businesses, to suspend the
judgement of the market. As Marx indicates, once capital “begins to sense
itself and become conscious of itself as a barrier to development, its seeks
refuge in forms, which by restricting free competition seem to make the rule
of capital more perfect, but are at the same time heralds of its
dissolution…”35 It might seem strange that branding could be seen as a
restriction of free competition, but as we shall see, that is precisely the
motivation: locking consumers in and competitors out. The ubiquity of the
brand demonstrates not ‘the astronomical growth in the wealth and cultural
influence of multinational corporations’,36 but a desperate attempt to avoid
capital’s own inner limitations.
AHISTORICAL BRANDS
As fetish objects brands appear to have no history. So according to one
brand theorist “Branding goes back to the beginning of history … from
Ancient Egyptian bricks to trade guilds in Medieval Europe” craftsmen have
34
Paul Kingsnorth, One No, Many Yeses, 2003, London: the Free Press, p146
Karl Marx, Grundrisse, Harmondsworth: Penguin, p651
36
Klein, No Logo, 3
35
38
Critique 35
always marked their wares.37 Actually, branding came into its own around
the 1890s, just as merger-mania was transforming the family firm into the
modern corporation.38
Leading brands of the 1890s:
American Express Travellers’ Cheques; Avon Cosmetics; Cadbury’s Chocolate;
Coca-Cola; Colgate; FT; Gillette; Heineken; Ivory Soap; Kodak; Lipton Tea;
McVities Biscuits; Pears Soap; Phillips Electronics; Quakers’ Oats; Steinway
Pianos; Van Houton’s Cocoa; Wedgwood Pottery.39
The next wave of branding activity was 1926 – again as straitened
circumstances forced the pace of mergers, creating corporations like the
BBC, M&S, and ICI. The post-war boom fostered the growth of the
consumer market, but it was the downturn of the 1970s that facilitated the
creation of Microsoft, Virgin, and the Body Shop. In the 1980s the British
government flooded the market with newly privatized companies: BT,
British Gas and BA. Today the big brands of the eighties marketing boom
are mostly in trouble: British Telecom’s funds were depleted by speculative
investment in East Asian markets, leading to pressure on Chairman Iain
Vallance, the Thatcherite Golden Boy; Marks and Spencers’ consistent
losses during the past decade and reputation for the drab have led to a retreat
from the global market, as indicated by the closing down of their French
operation. The privatized rail companies, like Virgin and Connex, have
become a by-word for disaster.
‘Brands’ – stylistic marks that subsume discrete commodities under one
brand name, associated with a company – are integral to mass production.
They substitute for the personal relations of trust associated with craft
production. But branding theory is a contemporary phenomenon, as are its
correlate goods whose value appears to inhere principally from the brand,
rather than the material qualities of the good. The valuation of brands on
company balance sheets is a relatively recent occurrence, signalling
Capital’s inner tendency to attempt to overreach simple market exchange. If
brands are rediscovered throughout history, we can lose sight of what is new
in the attempt by business to avoid the capricious nature of exchange.
37
Pettis Technobrands, p 7
‘The 1890s were the first golden age for the modern brand mark.’ Iain Ellwood, The
Essential Brand Book, p13
39
Ellwood, p23
38
39
Branding Over the Cracks
Brand Chronology
1893 Sears and Roebuck Co founded in Chicago, Coca-Cola registered as a
trademark
June 17, 1903, Ford Motor Company incorporation papers filed, Michigan
1926
Marks & Spencer Limited becomes a public company.
December 7, Imperial Chemical Industries founded in a merger
December 31 The British Broadcasting Corporation
1945, ‘Coke’ registered as a trademark
January 10, 1956, Elvis Presley records ‘Heartbreak Hotel,’
‘Let'
s be frank about it; most of our people have never had it so good,’ Prime
Minister Harold Macmillan told Britons, 20 July 1957
1965 McDonald'
s went public
November 1965 ‘England swings like a pendulum do,’ sang Roger Miller. After a
balance of payments crisis and deflation, the Daily Mail launches the ‘I’m backing
Britain’ campaign in 1968.
March 1976 Anita Roddick founds the Body Shop in Brighton – 25 years later 1700
Body Shops serve 49 markets across the world
November 1984 two million people buy shares in the newly floated British Telecom
(£4 billion), followed by British Gas in December 1986 (£5.4 billion) and British
Airways in February 1987 (£900 million).
9 August 1995 Netscape Communications Inc., floated on the stock exchange.
Microsoft incorporated its own Internet Explorer into Windows 95, which is
launched the same month.
DEFENSIVE BRANDING
While branding consultants talk up the creative aspect of branding, it is
rarely noticed that branding strategies are often a defensive reaction to
market conditions. In the 1970s Levi Strauss ‘made the mistake of
expanding beyond the core product lines’, reports Robert Holloway, VP
Global Marketing, an ‘expansion’ which ‘diluted the Levis brand and its
appeal to customers’.40 Levis re-branding in the 1980s was a reaction to the
perceived decline of the product.
Nick Hodges, Chief Executive of the London International Group, owners
of the Durex brand (‘Durability, Reliability, Excellence’, registered in 1929),
explains that the declining sales of condoms in the seventies tempted the
40
In Gilmore, p69
40
Critique 35
company into chinaware and photo processing – ‘diversification was an
eighties vogue’ – but profits were stretched and debts mounted up to 1993.41
But for the health crisis of Aids, the Durex brand would in all probability
have disappeared, rather than becoming what it is today, a world-beating
brand.
British Airways’ chief executive Bob Ayling explains that the effect of the
company’s first re-launch, post-privatisation, was beginning to pall (‘our
research confirmed that we needed to change again’42). The issue of
branding arises where, in Ayling’s words, there is ‘the need to re-launch’. In
each instance the response of these companies was to dire straits was to ‘rebrand’. Branding strategy is a counter-crisis measure for companies that
perceive their markets to be slipping away from them.
Iain Ellwood makes a case for ‘the added value of advertising’ that is
positively downbeat. It can “revitalize a brand that may be losing market
share; protect a brand against a competitors advertising effort; … reinforce a
brand’s appeal in the market.”43 The unavoidable conclusion is that
rebranding is a defensive strategy, designed to shore up a product that is
proving to be uncompetitive. The question remains whether the real point of
intervention ought to be the brand image or the product itself.
ANTI-COMPETITIVE BRANDING
In keeping with the defensive character of branding, it is pointed that the
brand consultants seek to play upon the anxieties of companies about the
competition. David A Aaker warns that “as industries turn increasingly
hostile, it is clear that strong brand-building skills are needed to survive and
prosper.”44 Intriguingly, the appeal of a branding strategy is that it will give
the additional push that gets your product ahead. Patrick McGovern,
chairman of the board of the International Data Group says that ‘Branding
has become much more important recently because of the proliferation of
choice that’s available to customers’.45 The unspoken assumption is that
apart from the brand, there is not much to choose between the different
products.
41
Ibid. p176
Gilmore, p38
43
Ellwood, p74
44
David A Aaker, Building Strong Brands, Free Press 1996, Inside flap
45
In Pettis, Technobrands, p 10
42
41
Branding Over the Cracks
In Britain for example, marketing and advertising have come to play an
ever-greater importance in the economy, just as innovation has declined.
The Department of Culture, Media and Sport reports that the ‘UK is the
fourth largest advertising market in the world’46 (way above its ranking in
GDP or growth). By contrast, the Department of Trade and Industry, only
recognising a problem at the level of investors’ subjective choices, believes
that the ‘UK remains relatively risk averse’: ‘The UK’s more risk-averse
approach generally contributes to lower levels of entrepreneurial activity
and affects the early adoption of new technology and new products and
processes based on such technologies.’47 With its historically low rate of
investment, the British economy presents an aggravated form of the
contemporary preoccupation with exchange over production. The problem is
that the concentration on marketing is largely a displacement activity for
innovation.48
Neo-classical economic theory teaches that the market rewards laboursaving and innovative products. Competition differentiates between
products on two scales, cost and quality. This was an economic theory that
corresponded to a period of innovation in which products were actually
differentiated. The role of competition is simply to realize the already
existing advantages of the superior commodity. But with branding theory
the priority is reversed. The superiority of the product is subordinate to the
reception and durability of the brand. Branding theory corresponds to a
moment in which the rate of innovation is relatively low, and the
differentiation of products, therefore, must take place through marketing and
advertising.
The original ad-buster Vance Packard first noticed the way that advertising
increased in importance in inverse proportion to product differentiation,
when he listened in on ‘an annual conference of advertising agency men’
who ‘heard an appeal for more ‘gifted artists’ in persuasion to cope with this
problem of the “rapidly diminishing product differences”’.49 Packard
highlighted the challenge made by Chicago Tribune research director Pierre
Martineau to advertisers: ‘What is the advertising direction going to be
46
Creative Industries Mapping Document 2001, p1.01
UK Competitiveness Indicators, Second Edition, Department of Trade and Industry, p69
48
See James Heartfield, Great Expectations: the creative industries in the New Economy,
Design Agenda, 2000
49
The Hidden Persuaders, Harmondsworth: Penguin 1962 (orig. 1957) p25
47
42
Critique 35
when the differences [between rival products] become trivial or nonexistent’. The answer, according to one agency president David Ogilvy, was
that ‘the greater the similarity between products, the less part reason really
plays in brand selection.’
A RESPONSE TO FALLING PROFIT MARGINS
According to Brian Sharples, president of Intelliquest, ‘developing a price
advantage is the single biggest lever that a company can employ to boost
margins and profits’.50 The promise of branding is that it can sustain price
advantage – even where the normal course of cost-reduction seems to lead
inexorably to reductions in price. Branding theory bucks the trend described
in neo-classical theory for the advantages of labour-saving technique to be
passed on to the consumer.
Iain Ellwood explains that ‘some [companies] often price their products too
low and the resulting effect is to devalue the brand … trying to reduce the
prices too much, leading to an unnecessary cut in profit margins’.51
Unfortunately, falling prices is a normal effect of competitive reduction of
costs. Michael Cox and Richard Alm illustrate the trend.52 They show how
long one must work in each decade since the 1920s to purchase some typical
commodities. (* latest in 1999)
Year
1920
30
40
50
60
70
80
99
Latest*
Half gallon
of Milk
Threepound
chicken
100
kilowatt hrs
electricity
37mins
31
21
16
13
10
8.7
8
7
2hrs
27mins
2:0
1
1:2
4
1:1
1
33
22
18
14
14
13hrs
36mins
11:
03
5:5
2
2hr
s
1:0
9
39mi
ns
45
43
38
3min coastto-coast call
30hrs
3mins
16:
29
6:0
7
1:4
4
1hr
24mi
ns
11
4
2
50
Pettis, Technobrands, p34
Kogan Page, 2000, p23
52
Myths of Rich and Poor, New York Basic Books, 1999, p.43
51
43
Branding Over the Cracks
For consumers, the effect of competition has pushed down the cost of milk
and chickens to a fraction of its cost to our grandparents. But to keep in the
game farmers and retailers are chasing minute profit margins on a gallon of
milk or a chicken. Avoiding these falling profit margins increasingly
engages the creativity of the firm.
A brand solution to falling profit margins is illustrated by the clothing
manufacturers, Levi Strauss. Levi’s Robert Holloway describes how the
initial failure of diversification only reproduced the trend of falling prices
over a wider – and less admired – range of commodities. As he experienced
it, the challenge that Levi faced was ‘putting Levi Strauss back into the
Jeans market’.53 But this is not quite the back-to-basics story that it appears.
The ‘jeans market’ was no longer simply about selling stitched cotton. As
Holloway notes, in 1996 Forbes announced that ‘Levi Jeans are not so much
a product as an Icon’. Holloway describes how ‘the decision was taken to
focus on image not volume. The high image flagship product of Levis brand
– 501 Jeans – would lead the company’s return to profitability’ – a goal
achieved by 1996.54
What in fact Levi Strauss did was to supplement the depleted value of the
cotton trousers by realizing the price of the icon. They were no longer
selling clothes, but kitsch, thanks to the unrewarded efforts of Marlon
Brando, James Dean, John Travolta and Mickey Rourke amongst many who
had invested the clothing with its new premium. The ‘brand-added value’ of
nostalgia for the 1950s shows up on Cox and Alm’s chart as a reversal of the
trend for commodities to fall in value relative to wages:
Year
Pair
of
Levis
1920
10 hrs
36
mins
30
5:18
40
4:3
0
50
4:00
60
2:36
70
2:18
80
2:48
90
2:48
latest
3:24
Iain Ellwood explains that with price cutting ‘the damage to the brand in the
long term is difficult to repair, especially as shrinking profits reduce
investment and quality’55 Clearly this was a lesson that Levi learned the
hard way in the 1970s. For Levi Strauss & Co. the value of the brand was
53
Gilmore, p69
Gilmore. p69
55
Kogan Page, 2000, p23
54
44
Critique 35
something worth defending in the courts. The British supermarket chain
Tesco’s bought 501s at cost, and, instead of charging the premium price of
between £32-£49 gave some of that back to customers by selling them at
£30, and then £25. According to reports, Levi Strauss ‘fears that its
reputation will be damaged if its jeans are sold in supermarkets’.56 On 5
April 2001, the European Court of Justice Advocate General Stix-Hackl
ruled against the power of brands, that Tesco had a right ‘to freely sell
products bought from around the world’. John Gildersleeve, Tesco'
s
director, said: ‘This is a great day for consumers.’57
In the European Court of Justice case, Tesco’s were at pains to distinguish
their strategy of buying up 501s in East Europe at cost to sell in West
Europe at a reduced price, from the growing market in imitation designerwear. But the market in fake labels is a response to the same market
distortion that Tesco’s exploited – the difference between the intangible
value added by branding, and the costs of production of the goods
themselves. In prosecuting designer rip-offs, top label companies insist that
they are protecting quality, but by their own admission, the quality no longer
inheres in the material object, but in the associations of the label.
The dispute between Tesco’s and Levi’s over the mark-up on 501s has little
to do with creating new value. Rather it is a dispute over the distribution of
additional value already created. By exacting a premium price, are attracting
more of the surplus value created elsewhere in the economy – like any
monopoly. Western consumer goods markets, buoyed by the expansion in
personal credit, set shop prices adrift from factory costs of production. By
importing goods, Tesco’s took advantage of price differences that arose
from the dampened spending power of East European consumers, but also,
presumably, from the reduced costs of production there. Neither company’s
strategy represents a substantial transformation of production relations for
capital as a whole, only a struggle over dwindling profit margin.
56
57
Telegraph, 17 January 2001
Telegraph, 6 April 2001
45
Branding Over the Cracks
The Limits of the ‘Brand –Added-Value’ theory
Between mid-1988 and the end of 1991, IT firm Compaq was falling out of its target
customers’ consideration and boosted its advertising, but sales failed to respond.
Market Research firm Techtel were drafted in to explain the problem: ‘opinion of the
brand was falling because of the price’, said Techtel’s president Michael Kelly.
Compaq’s high-value products were losing out against newer and cheaper rivals.
They fired the president, the advertising agency and laid off 1400 employees. To
reposition the brand as more competitive Compaq had to spend another $16M in
advertising to demonstrate that they had recognized the problem and dealt with it.
They had ‘broadened from a technology-driven image to a customer-driven’ one,
according to Kelly. (Pettis, Technobrands, p98) The theory of ‘brand added-value’
did not prevent Compaq from having to restore profitability by the more traditional
means of cheapening the goods by reducing labour costs to get a wider share of the
market – but the branding specialists demanded their slice anyway. Instead of
adding something new, Techtel only put a gloss on the ordinary dynamics of class
struggle.
LO-TECH LOGO
Brand strategies generally emphasise novelty and innovation. Branding
plunders the image-bank of the new technologies, from laboratoire Garnier
to ‘liquid engineering’ and the ‘appliance of science’. The dominant brand
strategy is ‘brand-new!’ – the promise of cutting edge technologies
(carefully moderated with new age values, of course). But all too often
branding and technological innovation are pulling in opposite directions.
Amongst themselves the brand strategists take a dim view of technology.
Patrick J McGovern of the International Data Group patronises the pointyheaded techno-geeks: ‘Technologists tend to think technology alone will sell
their products – that superior technology is the only thing that differentiates
them from their competitors’.58 How very silly of them, to think that
building a better mousetrap was the path to success.
According to Chris Pettis:
‘High technology customers face a Hegelian dialectic in that their high-tech
marketing and product managers, who understand well the technicalities of
58
Pettis, Technobrands, p10
46
Critique 35
their products, are not equipped with the overall brand expertise and
experience that their companies need but find it hard to define.’59
What Pettis is describing is not an Hegelian but a Marxist dialectic in which
the dynamic forces of production, represented here by the technologists, are
constrained by the conservative relations of capital accumulation. The
philistine marketing men personify the priority of circulation over
production, which are increasingly at odds.60
In fact, as technological innovation slows down, the importance of branding
increases. Brian Sharples, President of Intelliquest, Inc., says “technology
executives in mature markets have fully embraced the concept of branding,
although companies in new and emerging markets tend to focus more on
technology-based competition”61 – get with the programme, guys!
Innovation is so yesterday. Chuck Pettis explains cryptically, that ‘as
markets mature, creative technology solutions give way to standards as the
market begins to define and demand a compatible and standardized
approach’62 But what can Pettis mean by these ‘standards’ which creative
technology solutions must give way to. On closer inspection Pettis simply
means the image of high standards, as a promise that substitutes for the state
of the art (now a hopelessly passé formula).
The Director of Corporate Communications for Hewlett-Packard Co guiltily
admits that ‘we have not as a company, historically, been conscious of the
importance of managing the overall HP brand.’63 But then when HewlettPackard looked after the printers, the reputation of the brand looked after
itself. New technology companies that survived on innovation in the eighties
became increasingly image-conscious in the nineties. The terms ‘new
technology’, ‘IT’, and ‘dot.com’ no longer referred to specific technologies,
but themselves became a brand, and one directed primarily at investors at
that. By the bursting of the Internet bubble, an echo resounded in the hollow
space where the new technology should be. Most so-called Internet firms
proved to be either marketing ventures or potty enthusiasms. Branding got
the better of the Nasdaq, and investors were duped.
59
Pettis Technobrands, p166
‘The monopoly of capital becomes a fetter upon the mode of production’, Karl Marx,
Capital I, Lawrence and Wishart, 1974, p715
61
Pettis, Technobrands, p35
62
Pettis, Technobrands, p35
63
Pettis, Technobrands, p67
60
47
Branding Over the Cracks
Anti-competitive branding is an attempt to secure the continuation of profit
margins at the level of relations between companies. At its most extreme it
represents the divergence between capital’s existence as a source of new
value, and as technological progress. In the IT bubble, speculation
substituted real investment; investment in brands diverted resources from
investment in new means of production.
At another level, branding is associated with more than redistributed profits
between companies. The role of the brand in the reorganisation of global
markets and labour discipline indicates attempts to restructure production in
capital’s favour.
Intel Inside
In May 1991 a court ruled that ‘386’, the trademark previously exclusive property of
Intel was from then on common nomenclature for a microprocessor of those
specifications. ‘Out of this “crisis”’ writes Chuck Pettis, came the decision to
trademark the Intel Inside logo’ (Technobrands, p70). The Intel Inside campaign
was launched at a cost of $250M in the second half of 1991 and 1992, ‘the most
expensive ad campaign ever launched by a semi-conductor company’ (Ibid.). Intel’s
original appeal was due to its having cornered the market for microprocessors at the
top of the range. With more competitors muscling in, the company tried to hang onto
the term ‘386’, through legal means. But as William James said, the word ‘Dog’
does not bite, and Intel failed to lay claim to a number. Instead they diverted vast
resources into a branding exercise that targeted not just their Original Equipment
Manufacturer customers, but also end-users.
GLOBALISATION: AVOIDING PROBLEMS AT HOME
Globalisation was the buzzword for the nineties, and a core theme of
branding strategies. Just as George Bush Senior was promising a New
World Order, McDonalds was opening up in Moscow. The global reach of
brands like Nike and Coke seems awesome, but on closer inspection is less
so. The globalisation strategies that companies adopted were largely a
response to problems these same companies were having in their home
markets--like Marks and Spencer’s move to Paris.
48
Critique 35
According to David Bernstein, “deliberately setting out to become
international by assuming an international origin is wrong-headed … Brands
are born somewhere. Companies are born somewhere.”64 For all the talk of
globalisation, brands remain stubbornly national in their character.
‘International brands are creations of their homelands. MacDonalds, Coke,
Levi’s … are as American as apple pie’, says Bernstein.65 In brands, we can
see both capitalism’s inner striving to conquer a world market, but also its
inability to let go of national particularity.
It was the challenge of falling returns and saturated home markets that
persuaded many large companies to resolve their problems on the world
market. Nick Hodges at Durex explains that ‘during 1993 we put together a
plan to globalise the Durex brand, cutting costs by closing smaller factories,
moving production to the East and automating production in the West.’66
For Durex, then, globalisation was more of a desperate counter-crisis
strategy than a positive expansion.
Globalisation put new emphasis upon the brand, as competition in foreign
markets heightened the challenge of product definition. Bob Ayling
expresses the ambiguity of British Airways’ new identity, which is ‘aimed at
presenting British Airways as an airline of the world, born and based in
Britain’.67 L’Oréal first sought markets outside of France in the 1960s – the
point when De Gaulle bankrupted the country – leading Alain Everard, Zone
director, for Africa-Asia-Pacific to argue that ‘a key element to our success
is the internationalization of our brands’.68 Today eighty per cent of
L’Oréal’s sales are abroad. Levi Strauss and MacDonalds also found an
international solution to their further growth. Levi opened its first Original
store in Poland in the mid-Eighties, when wearing Jeans was a blow for
independence on the part of East European youth. The Moscow
MacDonalds opened in 1990 was as important for image as it was for
immediate sales – it ‘made the brand seem truly global’, said Senior Vice
President John Hawkes.69
64
Bernstein, Company Image and Reality: A Critique of Corporate Communications, Holt
Reinhart and Winston p133-4
65
Bernstein, p135
66
Gilmore, p177
67
Gilmore, p40
68
Gilmore, p50
69
Gilmore, p95
49
Branding Over the Cracks
At L’Oréal, Alain Everard explains that the company read the emerging
Asian markets as a new outlet: ‘The markets of developing countries tend to
follow a certain pattern. First a thin layer of buyers of luxury goods such as
Lancôme’… then ‘as income starts to move over $2000’ western middle
class aspirations are ‘reflected in purchasing’. ‘Between 1989 and 1993 the
market for health and beauty products grew by 94 per cent in Indonesia, 93
per cent in Malaysia, 60 per cent in Taiwan and 90 per cent in Thailand’.70
L’Oréal’s expansion was based on the role of East Asia as a locomotive
pulling the market economies out of recession in the eighties. According to
the World Bank ‘from 1965 to 1990 the twenty-three economies of East
Asia grew faster than all other regions of the world’.71 The emerging
markets of East Asia solved L’Oréal’s problem of securing profits – at least
until increasingly speculative Western investments there led first to boom
and then bust. L’Oréal’s latest expansion is the L’Oréal Kids line.
Global re-branding can lead to anxiety about the identity of the product. Bob
Ayling explains the real background to the much-debated re-design of BA’s
livery. Dispensing with the Union Jack tailfins in favour of abstract ethnic
designs provoked BA’s original sponsor Mrs Thatcher to cover up the model
on a BA display at the Conservative Party conference. ‘One of the most
difficult branding issues is what happens to the brand as strategic alliances
are formed with other airlines’.72 In this case it was a deal with Qantas, in
which BA took a 25 per cent stake. For a while the company thought about
the brand Global Airlines as the natural successor to British Airlines, but
rejected it. Global Airlines represents the notional liberation of BA from its
national boundaries, but in fact BA remained tied to the fortunes of British
capitalism. The consolidation of the European markets was driven in part by
Britain’s own competition policy. The ambiguity of the tail design expressed
BA’s own ambiguity as a British-owned company, with global aspirations.
‘The new identity is aimed at presenting British Airways as an airline of the
world, born and based in Britain’.73 As David Bernstein says, ‘Marlboro is
international because it is American. Perrier because it is French, Johnnie
Walker because it’s – Scotch.’74
70
Gilmore, p49
The East Asian Miracle: Economic Growth and Public Policy, A World Bank Policy
Research Report, Oxford University Press, 1993, p1
72
Gilmore, p42
73
Gilmore p40
74
Bernstein, Company Image and Reality: A Critique of Corporate Communications, Holt
Reinhart and Winston p136
71
50
Critique 35
GLOBALISATION AND THE MERGERS & ACQUISITIONS
MARKET
Company growth through Mergers and Acquisitions (M&A) is accelerating
on the European continent in anticipation of the single currency and across
the world. For a company, securing a rival brand enhances monopoly
domination of the market. With each merger, brands are consolidated.
Bob Ayling at BA explains how Jacques Delors’ Single European Act of
1988 led to the greater consolidation of the European airbus industry:
The laws in Europe forbidding foreign airlines from having a
majority stake in domestic airlines have recently been
liberalized. We took advantage of this by taking stakes first in
TAT and then in Air Liberté in France and in Deutsche BA in
Germany. In these we have control over their operations…75
The question raised is whether BA are positively interested in the rival
brands’ own performance, or negatively in taking out a competitor.
Nick Hodges at Durex explains how the process of re-branding bought up
local rivals works:
When re-branding local brands – such as Hatu in Italy, Sheik
in the United States or London in Germany – we implement a
three step plan. Step one sees the Durex seal of Quality on the
front of all non-Durex branded packs. Step two links the local
brand to Durex on the front of the pack. Step three positions
Durex as the parent brand, Durex Sheik, for example.76
Ultimately, of course, the rival brand is not important for what it brings to
the company, but for its absence as a competitor.
75
76
Gilmore, p42
Gilmore, p179
51
Branding Over the Cracks
BRANDING OFF THE COMPETITION
Generally seen as evidence of the triumph of the free market, branding
strategies are in fact about avoiding the downside of competitive pressures.
Fiona Gilmore differentiates the strategy of branding from the cost-cutting
measures in vogue in the 1980s: ‘This simple economic value comes from
the price premium justified by effective branding, maintaining and growing
markets, and from building brand loyalty to deter new entrants and
substitutes, thereby making future earnings more secure.’77 Bob Ayling
emphasizes the point that branding must secure markets against new
entrants: ‘One of the big branding challenges that British Airways has faced
over the last few years it that as a “mature” brand it has to keep the brand
fresh in the face of “new” brands … new entrants’ to the market’.78 You do
not have to subscribe to the victim mentality adopted by Richard Branson
and Freddie Laker to understand that BA plays hardball when it comes to
protecting their over-mature “brand” against rivals.
The economic advantage of excluding competitors from the market can be
seen from the premium Nestlé paid for the Rowntree Group, more than five
times the book value of the company, at £2.5 billion. Of that sum two billion
represented the economic advantage of excluding a rival from the market.
According to Iain Ellwood, ‘Once a company has large market share in one
product, it will be easier to gain share in an associated market than further
increase the original.’79 Here it is clear that the prospect of growing the
company by buying up rival brands has substituted for developing new
products and creating new markets. Ellwood writes that ‘as global
consolidation takes place, there are huge financial incentives to buy up
strong brands in fields where the company is weak, rather than developing
new brands from scratch.’80
ECONOMIES OF SCALE
While buying up rival brands is one response to global markets, another is to
globalise the brand. Amongst twenty ‘ways that branding online can offer
77
Gilmore, p2
Gilmore, p47
79
Advantages of Brand Extension, Iain Ellwood, The Essential Brand Book, p39 my
emphasis
80
Ellwood, The Essential Brand Book, p39
78
52
Critique 35
added value’ Iain Ellwood proposes ‘go global – even small companies can
now reach a large global audience for a low cost.’81 It is an insight that has
long been understood that global marketing reduces marketing costs.
‘International campaigns are tidy; save advertisers time and production
costs’, says David Bernstein. 82 What Bernstein and Ellwood are describing
are the positive effects of economies of scale. With the expansion of
companies, the reproduction efforts can be cut out. This is as true of
marketing as it is of product development or purchasing.
For L’Oréal’s Alain Everard, the savings represented by international
marketing were vital. Reproduction on an expanded scale meant that the
company could save on design and packaging – ‘we project the same brand
names and images in all markets’. But marketing beauty products on an
international scale presents certain definitional problems:
‘We use the local language and adapt the international advertising unless
there are exceptional reasons for not doing so … for example in Malaysia
and Indonesia it is forbidden to air TV ads with non-Malay/Indonesian
models so we use well-known local models.’83 In more amenable Thailand,
though, Natassia Kinski (and now Andie MacDowell) serves as a model for
beautiful women. Everard insists though that ‘we can sell not only the
French way of life … but other cultures as well: the American way of life
with Ralph Lauren … Italian values with Armani…’ Whilst L’Oréal’s sales
are parasitic upon East Asian success, globalisation for them seems only to
mean the extension of Western culture to the East.
‘Companies … could enforce rigid uniformity as McDonalds
does, where every staff member in every country should greet
and treat customers in the same prescribed manner… The
advantage for McDonalds is that one system can be
continuously refined and spread across the world, as internal
communication is standardized.’84
81
Ellwood, p 39
Bernstein, p136
83
Gilmore p54
84
Ellwood, p46
82
53
Branding Over the Cracks
BRAND EXTENSION
One way to economise on marketing is to extend the brand, by including
new products under a well-established trademark or logo. ‘Extending the
power of a brand into new products and services is one of the strongest
reasons for brand-building’ suggests Thomas Gad.85 As an economy of
scale, brand extension can be advantageous. According to Ellwood the
‘advantages of brand extension’ include ‘lower introduction costs for new
products or lines … lower risk on investment in new products.’86 That way
the new product can piggyback the success of the old. In effect the
company’s prior achievements become guarantor to the customer that the
new line will be of the same standard. ‘Virgin has become a true lifestyle
brand, with people adopting its values as a convenient way of reflecting
their own aspirations,’ writes Ellwood.87 It is perhaps a poor example.
Following the failure of Virgin Trains, Branson’s VOP Holdings, owners of
the Our Price and Megastore chains lost more than £126 million in the year
to January 2000. A tongue-tied Branson described the loss as ‘a significant
erosion of the company’s profitability’.88
But brand extension carries pitfalls. ‘The Pierre Cardin brand … has been
stretched too far and has now been devalued,’ warns Ellwood, sagely. 89 The
view that brands become over-extended describes real problems, but through
the prism of branding fetishism. In truth it is not the brand that is
overextended, but the company. The reputation of the brand is just where
the problem comes to light.
OWE MY SOUL TO THE COMPANY STORE90
Perhaps the most successful example of brand extension is the expansion of
retail outlets like Wal-Mart and Sainsbury’s in the 1980s. Iain Ellwood
explains well what the basis of the supermarkets’ success is:
85
Gad, p138
Ellwood, p38
87
Elwood, p36
88
Private Eye, 23 March 2001
89
Ellwood, p36
90
“You haul sixteen tons and what do you get? Another day older and deeper in debt. Saint
Peter don’t you call me for I can’t go, I owe my soul to the company store.” Tennessee Ernie
Ford “Sixteen Tons”, 1954.
86
54
Critique 35
Supermarket multiples are an excellent example of how retail
power has increased in the business chain. Their grip of the
general grocery market has tightened with a few key brands
such as Sainsbury’s, Tesco and Waitrose dominating the UK
market. They can use their superior buying power to reduce
costs and generate profits, which in turn squeezes the supplier
still further.91
The aggregate buying power of the large chains has created real economies
in distribution as well as holding down wholesale prices – even leading to
complaints from the British Prime Minister that supermarkets had a
stranglehold on farmers. Though some suppliers get hurt, Ellwood is right
when he points out that some of ‘the top branded supermarket multiples’
own-label products are now better quality than many manufacturers’
brands.’92 In fact this is what one should expect as concentration of
production brings economies of scale. The supermarkets’ buying monopoly
has given them the leverage to force the restructure the food production and
distribution chain. The outcome is either a coalition between farming and
supermarkets, as in the case of the Co-op, or the consolidation of smaller
farms into large agri-business. Tough as it is for small farmers, supermarkets
will not pay them more because they are more labour intensive than agribusiness.93
A more fanciful outcome of supermarket consolidation, though, is the hope
invested in loyalty cards. ‘The shopping data gathered from these cards is
enormous … Stores can use this information to predict and redirect stock,
for promotion and seasonal trends.’94 Still caught in the full flush of this
innovation Ellwood gets carried away with the potential:
It cannot be long before they develop a more sophisticated
programme of bronze, silver and gold card holders to segment
91
Ellwood, p50
Ellwood, p53
93
‘The introduction of power looms into England probably reduced by one half the labour
required to weave a given quantity of yarn into cloth’, according to Marx, though ‘the handloom weavers, as a matter of fact, continued to require the same time as before’. Like the
hand-loom weavers, small farmers’ prices are set by more efficient large producers. Capital
I, Ch.1, p47, Lawrence and Wishart, 1974.
94
Ellwood, p51
92
55
Branding Over the Cracks
their shoppers further. Potential fast-track checkouts for gold
card holders and a seductive concept for those with little time
available.95
What Ellwood is describing is the supermarkets’ ambition to tame the
unpredictability of the consumer goods market. Seeing their aggregate
purchasing power enhanced, these large retail outlets imagine that the
businessman’s Nirvana of a perfectly planned market is within their reach.
Surely, they reason, now that we have consolidated all of the high street
outlets into one, the anarchy of competing over a fickle customers’
unexpected choices is at an end. In the days of primitive markets, such
ambitions were realised with the emergence of the ‘company store’, where
employees bought goods from an outlet run by their employers. With typical
market rationality, Company Stores were known for overcharging captive
markets, often setting prices above the wages the same company paid them.
Of course, the ambition to recreate the Company Store tells us more about
the anxieties of the store managers more than they do about markets. All the
evidence is that customers carry many different ‘loyalty’ cards, although
Britain’s fourth largest chain Safeway abandoned its card, saying that the
move would help to deliver savings for customers of up to £110m.96
Ellwood is more accurate when he says that ‘the introduction of loyalty
cards has helped competitive multiples define and protect their territory’.97
Anxiety, not opportunity, drives the supermarkets to try to ward off the
insecurity of the market place, the very institution to which they owe their
success.
RE-BRANDING AS DISCIPLINING THE WORKING CLASS
BA’s Bob Ayling understands that the company’s re-brand was directed as
much at the staff as it was at the customers. ‘The new livery, the efficiency
programme and the change in staff skills are all designed to show employees
and customers the airline is changing, as we need to do’.98 Similarly, at
L’Oréal Alain Everard understands the coercive power of the brand over the
employees. “When it comes to hiring people in South East Asia, for
instance, we have to make them understand that they are joining not only a
95
Ellwood, p51
‘Safeway To Abandon Loyalty Card Scheme’, Financial Times, 5 May 2000
97
Ellwood, p51
98
Gilmore, p39
96
56
Critique 35
company manufacturing skin care which they may use … but which is the
number one cosmetics company in the world”.99 Now it is the workers who
have to pay homage to the brand, like worshippers of a wooden fetish, as if
they owed their existence to the brand, not the other way around. Pettis has
employees recite the corporate catechism, to remind them of their higher
purpose:
Employees should have the positioning statement and the
associations posted at a visible spot near their telephones so
that they can refer to them when communicating with any of
the companies publics, including prospects, customers and
suppliers.100
At Asda, store debts of £1 billion, falling share prices and lost sales in 1991
led to a re-branding exercise, that saw the ‘crisis ridden company’ return to
its niche as the ‘low value family shop in poorer areas’, and abandon its
plans to challenge more ‘up-market’ stores like Sainsbury and Tesco.101 The
brunt of the re-branding was directed at the staff, as Chairman Archie
Norman insists ‘central to the Asda proposition is straight talking’.102 For
Asda employees that meant ‘living the legend’ (!).103 It also meant that
Asda reversed its financial condition by 1996 through the simple expedient
of raising capital from its staff: ‘we … have the biggest share ownership
plan in Britain. Since it was launched in July 1995, 36 000 colleagues have
taken up share options’104 Re-branding was only partially directed at the
outside world. Perhaps the most significant aspect is the emotional pressure
upon staff to ‘live the legend’, meaning, in the end, ‘work harder … and bail
us out while you’re at it’.
The ideological claim of mission statements upon staff indicates that,
finally, branding strategies are dependent on the production process,
however much it appears that success can be won simply at the level of
marketing. Unfortunately, re-branding is generally a substitute for real
change in the production process; so re-branding strategies are mostly
exhortations as far as the workforce is concerned. Anita Roddick’s Body
99
Gilmore, p53
Pettis Technobrands, p121
Gilmore, p30, p28
102
Gilmore, p 31
103
Gilmore p33
104
Gilmore p33
100
101
57
Branding Over the Cracks
Shop provides an interesting example of a branding strategy that seeks to
disguise its own character through marketing. David Aaker explains ‘The
Body Shop charter reminds employees as well as customers that “goals and
values are as important as our products and profits” and that “the Body Shop
has soul – don’t lose it”.’105 Body Shop founder Anita Roddick believes that
“employees like customers are ‘hyped out’” and need a sense of purpose
that is more ennobling and involving that mere profits.”106 Roddick’s
mission statement is a piece of employee-oriented branding, whose result is
to get the best out of the workers. Curiously, the very denial of the goal of
profit creation has proved to be a very successful piece of profit-creation –
drawing upon the best intentions of the employees to earn profits of
GBP6.8m and a book value of GBP300m at their height.
Thomas Gad states a branding cliché when he says: ‘People are one of the
greatest assets in a modern business and the single most important asset in
building a brand’.107 Iain Ellwood makes the same point: ‘People are the
greatest asset for any company: if they can be encouraged to express the
brand at all levels, the business will benefit enormously.’108 But this is a
cliché that needs to be unpacked. On the face of things it acknowledges the
special contribution of the workforce. But their contribution is to act as
‘expressions’ of the brand. In true brand-fetish mode, Ellwood makes the
brand the originator and the workers the loyal creations. According to
Thomas Gad, a good brand:
will enable you to have your pick of the best people from the
universities or the job market, and they will work for you for
lower salaries, fewer fringe benefits, while making fewer
demands for personal development.109
At this point one has to feel that Gad is carried away with the magical
properties of the brand, imagining that logos and narratives can do the work
of pay and prospects in getting the best out of the workforce. In the real
world workers’ acquiescence or combativeness determines the extent of
their adoption of the company brand, not the other way around.
105
David A Aaker, Building Strong Brands, p109
David A Aaker, p109
107
Gad, 4D Branding, p164
108
Ellwood, p26
109
Gad, p36
106
58
Critique 35
DE-PERSONIFICATION OF CAPITAL
The emergence of the brand is made possible by the overcoming of the
family firm. Many brands take the form of a personalisation of the product:
Colonel Sanders, Ronald MacDonald, Mr Gillette are all essentially
fictitious proprietors, or where they are real people, have long since ceased
to be the principle share-holders. Just as common is the association of the
brand with a personality, like L’Oréal’s use of Andie MacDowell as brand,
herself replacing Natassia Kinski.110
The corporation supplants the individual as owner of the firm. Sir Edward
Coke in the 17th Century concluded: “a corporation was but an impersonal
creation of the law – not a being, just a product of written rules and
government fiat”111 Nonetheless, the fictitious person of the corporation
must be recognised in law as having rights and responsibilities just as if it
were indeed a person. For the brand, too, as individual proprietors are left
behind, ersatz persons, brand-characters who make the product intelligible
to the consumer, must replace them. For individual customers, there is a
need to put a face to the corporation, even if it is a fictitious face. The brand
assumes a human character that people can relate to, and place within a
human narrative – even when that is markedly fictional. “Today”, writes
Thomas Gad, ‘“your brand has to have the qualities of a dear friend,
someone you really trust (and I mean really).”112 It is helpful that Gad, the
advertiser who coined ‘connecting people’ for Nokia, insists that his
comment is not figurative. It tells us that he really does think that the brand
is a person. The victory of the fictitious corporate person over mere mortals
is complete.
110
‘Some brands rely on the narrative of their founder, such as Bill Gates of Microsoft, to
personify the changes in the personality of their brand; … Other brands us a fictitious family
or characters … like the two Oxo families who we watched grow up over 15 years of
advertising.’ (Ellwood, p137)
111
Bernstein, p18. Karl Marx considered the formation of stock companies ‘directly
endowed with the form of social capital (capital of directly associated individuals) as
distinct from private capital, and its undertakings assume the form of social undertakings as
distinct from private undertakings’. He added ‘It is the abolition of capital as private
property within the framework of capitalist production itself.’ (Capital III, Lawrence and
Wishart, 1984, p 436.
112
Thomas Gad, 4D Branding, p11
59
Branding Over the Cracks
In an age when people were less willing to suspend their disbelief, David
Bernstein proposed that ‘A corporate personality is far easier to convey
when there is a single entrepreneur, extrovert and identifiable at the helm’.
113
But if that is the case, who are these nobodies that Bernstein uses to
illustrate his argument?
‘Tesco, Jack Cohen; Lotus, Colin Chapman; Thorn, Sir Jules; IBM,
Thomas Walton; Texas Instruments, Pat Heggarty; Mars, Forrest Mars;
Hanson Trust, James Hanson; Argyll Foods, James Gulliver; AIB, Bernard
Audley’?114
Sir Hector Laing’s (United Biscuits’) earlier point, that people come and go
but brands go on forever begins to make sense, when we consider the way
that the corporation has liberated itself from human mortality to become a
transcendent persona.
BRAND ADDED VALUE—THE CONTEMPORARY CONCEPT OF
CAPITAL
Interbrand estimates the additional value that brands bring to some big name
products:
Brand
Brand value $M
Coca Cola
83,845
Microsoft
56,654
IBM
43,781
General Electric
33,502
Source: Interbrand/Citibank 1999
They also estimate the extent to which brands multiply the value of some
key supermarket products:
Brand
Multiple
Coca Cola
4.95
Gillette
3.83
Louis Vitton
2.35
Source: Interbrand/Citibank 1999
113
114
Bernstein, p65
Bernstein, p65
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Critique 35
In 1988, British foods company Rank Hovis MacDougall ‘made history by
becoming the first firm to include a brand valuation on its balance sheet’.115
The ‘added value’ of the brand represents a return to an archaic conception
of profit – that of ‘profit upon alienation’ associated with early economic
theorists the mercantilists. The mercantilists adopted the standpoint of the
merchants who made money on the mark-up between purchase and sale.
East India company merchant Thomas Mun (1571-1641) persuaded the
treasury that added value comes from selling ‘more to strangers yearly than
wee consume of theirs in value’ The theory of ‘profit upon alienation’ fell
into abeyance as manufacturers saw the importance of creating new value
through increased productivity, relegating the ‘profit upon alienation’ to the
end point, or realization of the prior gains.
In the 1980s, a renewed emphasis upon marketing resurrected the theory of
‘profit upon alienation’. Prime Minister Margaret Thatcher credited her
‘father’s background as a grocer … for my economic philosophy. . .ensuring
the incomings showed a small surplus over outgoings at the end of the
week’.116
In another respect, though, the brand-added value concept departs from the
eighties dogma of cost-cutting competition--in the equilibrium model of
economics popular in the eighties growth was out of the picture. Instead,
markets were seen as a zero-sum game, in which Peter is paid by robbing
Paul. That view corresponded to a time when market raiders like the late Sir
James Goldsmith could make more money buying up companies, breaking
them up and selling their assets than by engaging production.
With the return of growth in the nineties, shadow chancellor Gordon Brown
showed off his knowledge of the latest economics in a speech about ‘neoclassical endogenous growth theory’. Deputy Prime Minister Michael
Hesletine ridiculed ‘Labour'
s brand new shining modernists' economic
dream’ by punning on the speechwriter’s name ‘But it’s not Brown’s, it’s
[Ed] Ball’s’. Brown’s re-focusing on growth, though, won the day, and since
1998 the Office of National Statistics have recorded Gross Value Added in
the economy. Value Added is calculated by comparing the difference
115
116
Thomas Gad, 4D Branding, p10
The Downing Street Years, London: Harper Collins, 1993, p11
61
Branding Over the Cracks
between the value of input compared with output. Since all inputs – wages,
raw materials, and machinery – are paid at cost, the Value Added remains
the mysterious product it always was, except that the alchemy invoked to
explain it today is not the philosopher’s stone, but the bewitching powers of
brands. ‘Brand equity can be defined as the value provided to a product or
company by its brand identity’, writes Pettis.117 Why brands get the credit
tells us more about the preoccupations of our own time than it does about
the mechanisms of wealth creation. In other ages, the qualities that were
deemed to garner special reward were thrift, risk-taking intellect, or
breeding. In our image-conscious age, graphic design and logos are invested
with the magical property of making something out of nothing.
The concept of Brand is the contemporary version of the concept of capital,
the value that begets more value. “Branding survives because it enhances
the present value of future cash flows”, writes Fiona Gilmore.118 “Products
are made in the factory” says Walter Landor, president of the Landor
branding agency, “but brands are made in the mind”.119 As ever, the
capitalists want to separate off the magical property of creating additional
value from the dreary business of making things. The divorce between the
value of brands and the apparent cost of production reinforces the belief that
brands create value out of mental power alone.
A logo “won’t cure all the ills of a badly run company” warns David
Bernstein, “but companies are tempted to think so – and this contributes to
the cost”. Bernstein argues that “if the benefits of a house style are so
wondrous then no self-respecting company can pay peanuts for the
treatment”.120 What Bernstein means is that the high cost of re-branding
arises from the company’s own anxieties about its competitiveness. The
more anxious they are then the greater the cost of the re-branding will be.
“The reputable designer”, writes Bernstein, “regards himself as a problem
solver” “The Company therefore has a problem”, Bernstein continues.
“Otherwise why call him in?” The cost of the service is in proportion to the
anxiety of the company. The advertiser preys upon the company’s
uncertainty about itself. The good designer “will ‘ask the question behind
the question’”. In other words, he will discover yet more problems that the
117
Pettis Technobrands, p14
Gilmore, p2
119
Quoted in Naomi Klein, No Logo, p195
120
Company Image and Reality: A Critique of Corporate Communications, Holt Reinhart
and Winston, 1984, p157
118
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Critique 35
company did not even know it had. Bernstein’s caveats belong to another
age.
Estimating the added value of the brand raises certain difficulties. Thomas
Gad has outlined the different methods. Cost-based value: ‘accumulates
costs for building the brand’; Revenue-based value: ‘current value of the
expected future earnings’; Transaction-based value: ‘market prices of a
similar brand acquired recently’.121
The flaw in all the valuations of brand-added value is the assumption of
additional value to be had. As explanations from the standpoint of the
individual firm it makes sense to argue that the profit margin is the sum that
you have withheld from your rivals. But as an account of the economy as a
whole it cannot succeed without a prior explanation of the existence of
surplus in the economy. At one level this is not difficult. All societies at a
higher level than Colin Turnbull’s benighted Ik122produce a surplus over and
above what they consume. The economic form that the surplus product takes
is the defining characterisation of that society, as slave society gave up its
surplus as Tribute, Feudal society its service and industrial capitalism its
profit. It is characteristic of our image-conscious and culture-driven age that
what added value is to be had, is attributed to the magical power of the
brand.
121
122
4D Branding, p133
Colin Turnbull, The Mountain People, London: Pan Books, 1974
63
Branding Over the Cracks
Jerry Gibbons, President of the Doyle Bane Bernbach advertising agency met client
Bill Gates of Microsoft in 1982. ‘Our feeling is that you’re not spending at a level
that’s appropriate for your company right now’ Gibbons told Gates, whose
advertising budget was $250 000. Gibbons took a bar napkin, drew a circle – ‘this is
your industry today’ – marked out a pie section, saying ‘this is your current share,
and as you know, the industry is going to be growing’. Gibbons drew a larger circle
to represent the difference between $1.5 billion and $5 billion. ‘This is how it’s
going to be growing in the next few years, and good strategy for your company
would be to capture as much share of the market as you can now while share points
are cheap. Share points are cheap because the market size is small. As the market
grows the cost of acquiring share points is going to increase greatly. If you can
increase your share, then when it becomes more competitive, all you’ll have to do is
protect your share.’
‘He grasped that concept pretty quickly’. Gates went back to Seattle and doubled his
advertising budget.
Source: Chuck Pettis Technobrands, p145
64